Inflation Calculator
What will today's dollars actually buy in 10, 20, or 30 years? See future purchasing power at any inflation rate.
Last updated: October 2026
Inflation details
Purchasing power by year
| Year | Purchasing power | Basket cost |
|---|---|---|
| Enter your details and click Calculate. | ||
What inflation does to money
Inflation is the slow leak in every dollar you hold: as prices rise, each dollar buys a little less. At 3% annual inflation, something that costs $100 today costs about $103 next year, and the erosion compounds, exactly like interest but working against you. Over decades, the effect is enormous: money sitting in cash does not stay still, it shrinks in real terms every single year.
This is why "how much will I have?" is the wrong retirement question. The right one is "what will it buy?" A million dollars sounds like plenty until you translate it into future purchasing power.
The purchasing-power formula
Future purchasing power discounts today's amount by cumulative inflation:
where i is the annual inflation rate and n is the number of years. Flip it around for the future price of today's basket: Future price = Amount × (1 + i)n. The cumulative price increase is simply (1 + i)n − 1, expressed as a percent.
Worked example
$100,000 in today's dollars, 30 years out, at 3% annual inflation.
The inflation factor is 1.0330 = 2.4273. Purchasing power: $100,000 / 2.4273 = $41,199. A basket of goods costing $100,000 today will cost $242,726 then. Cumulative price increase: 142.73%. In other words, holding $100,000 in cash for 30 years quietly destroys $58,801 of purchasing power.
Try 2% instead: the same $100,000 keeps $55,207 of purchasing power. Try 5%: it keeps only $23,138. Small differences in the assumed rate change the answer dramatically over long horizons, which is why testing a range matters more than picking one "right" number.
Inflation vs investment returns: real returns
Investment growth only counts after inflation. The approximate relationship is simple:
A portfolio earning 7% nominally during 3% inflation grows your purchasing power about 4% a year. A savings account paying 1% during 3% inflation loses 2% a year in real terms, even though the balance goes up. Whenever you project savings or investment growth, subtract inflation to see what you actually gain. (The precise formula is (1 + nominal) / (1 + inflation) − 1, but the subtraction shortcut is close enough for planning.)
Why 2 to 3% matters more than it sounds
People dismiss low inflation as background noise, but compounding makes it the dominant force over a lifetime. At 3%, prices double roughly every 24 years (the rule of 72: 72 / 3 = 24). Someone retiring at 65 and living to 89 will watch prices double during retirement. Planning in today's dollars without an inflation adjustment is planning with a number that quietly expires.
Inflation FAQs
What inflation rate should I use for planning?
The long-run US average is about 3% per year, and the Federal Reserve targets 2%. Use 3% as your base case for long-term planning, and test 2% and 5% above to see the range of possible outcomes.
What is the difference between inflation and CPI?
Inflation is the general rise in prices. The Consumer Price Index (CPI) is the most common way it is measured: it tracks the price of a fixed basket of household goods and services over time.
How does inflation affect my retirement savings?
It shrinks what your savings buy. At 3% inflation, $1,000,000 saved today has only about $412,000 of purchasing power after 30 years. Your investments need to outrun inflation, not just grow in nominal dollars.
What is a "real" return?
Your return after inflation. Approximately: real return = nominal return minus inflation. A 7% investment return with 3% inflation is roughly a 4% real return, and that 4% is the growth that actually increases your purchasing power.
Has inflation always been around 3%?
No, it swings. The US saw double-digit inflation in the early 1980s, near-zero stretches, and the 2021 to 2023 spike above 8%. The 3% figure is a century-long average, useful for planning but not a prediction for any given decade.
What causes inflation?
Broadly: too much money chasing too few goods. Strong demand, supply disruptions, rising wages and input costs, and expansive monetary policy can all push prices up. Central banks raise interest rates to cool demand and bring it back down.
What is hyperinflation?
Inflation so extreme that money loses value in weeks or days, often defined as 50% per month or more. Famous cases include 1920s Germany, 2000s Zimbabwe, and recent Venezuela. It is a monetary collapse scenario, not normal economic life.
Should I keep cash during high inflation?
Only what you need for near-term spending and emergencies. Cash earns little and loses purchasing power every year inflation runs hot. Longer-term money belongs in assets with a record of outpacing inflation, like diversified stocks or inflation-linked bonds.
What is deflation, and is it good?
Falling prices across the economy. It sounds pleasant, but it is dangerous: consumers delay purchases waiting for lower prices, debts get heavier in real terms, and economies can stall. Central banks fear deflation more than moderate inflation.
Why does the Fed target 2% inflation?
Two percent is considered the sweet spot: enough to keep the economy growing and avoid deflation, low enough that price changes do not distort decisions. It also gives the Fed room to cut rates in a downturn without hitting zero immediately.